This is an application to study strategy discovery and transfer in children with and without mental retardation. It is proposed that prior research has underestimated the strategy competence of children classified as educable mentally retarded (EMR). In our current program of research we have demonstrated that children with mental retardation are able to devise sophisticated external memory strategies (arranging objects in the pattern in which they are to be recalled) when given the appropriate physical and verbal prompts and do not require direct instruction in these situations. These findings contrast with existing research in which children with mental retardation show consistent deficits in memory abilities. The proposed research will investigate these newly discovered strategy competencies in children with mental retardation, with a focus on strategy discovery and generalization. Three experiments will investigate intellectual and developmental differences in children with and without mental retardation. The first experiment will include 17-year-old children classified as EMR and mental-age (9 years) and chronological-age (17 years) comparison groups of children without mental retardation. The children will listen to sentences such as "The coin is above the broom" and then place objects in the specified relation upon a computer screen. This experiment will test differences in generalization of strategy learning in conditions of explicit training and strategy discovery to determine if the difficulties children with mental retardation have had in prior generalization studies are reduced under conditions supportive of strategy discovery. The second experiment will examine strategies used to solve addition problems in order to determine if the discovery and evolution of external strategies (counting on fingers) in young children with mental retardation (8- to 12-years-old) is more dependent on situational support than for children without mental retardation of approximately the same mental age and with the same counting skills. The third experiment will determine if such counting strategies can be induced in children with and without mental retardation by including "challenge problems" that begin to tax the computational competence of the children. These experiments will establish the importance of strategy competencies, variables that may accentuate these competencies, and the mechanisms that may lead to strategy deficiencies in children with mental retardation and will suggest initial approaches to "situational engineering" that accentuate the cognitive competencies of children with mental retardation.